To set the parameters, my wife is considered an HCE, and thus is limited in the percentage that she can contribute to her 401k. Let's say that based on that percentage, she would end up with about $1500 in after-tax contributions. All of these after-tax contributions would occur toward the end of the calendar year, because they have an option to automatically switch from pre-tax/Roth to after-tax when the IRS limit has been reached. This does not affect the employer match.

So question #1, it appears that there is either a fee of $20 or $40 to do the rollover. Is it worth the fee on such a small amount of after-tax contributions?

And question #2, since she does not have the option to roll the earnings back into the 401k and we do the backdoor Roth, the earnings would also go into the Roth IRA. How is that accounted for on a 1040?

To set the parameters, my wife is considered an HCE, and thus is limited in the percentage that she can contribute to her 401k. Let's say that based on that percentage, she would end up with about $1500 in after-tax contributions. All of these after-tax contributions would occur toward the end of the calendar year, because they have an option to automatically switch from pre-tax/Roth to after-tax when the IRS limit has been reached. This does not affect the employer match.

So question #1, it appears that there is either a fee of $20 or $40 to do the rollover. Is it worth the fee on such a small amount of after-tax contributions?

And question #2, since she does not have the option to roll the earnings back into the 401k and we do the backdoor Roth, the earnings would also go into the Roth IRA. How is that accounted for on a 1040?

Question 2: You'll receive a 1099-R, and the gains will essentially show up as income on which you'll pay taxes.

Since she's an HCE, her after-tax contributions will be subject to ACP testing.

Hmmm, I wonder what the odds are that her after-tax contributions would move the needle on ACP testing? She's on the low end of the HCE scale in a megacorp. Given the max contribution percentage limit, the after-tax percentage will be low.

But it's definitely something to think about. If we do this, it's not going to be till 2018 anyway.